A federal judge has issued a nationwide preliminary injunction temporarily blocking enforcement of certain provisions of Corporate Transparency Act. The Corporate Transparency Act was enacted in 2021 and aimed at combating money laundering and illicit financial activities by requiring most companies to disclose their beneficial owners to the Financial Crimes Enforcement Network. The law aimed to increase transparency by targeting anonymous shell companies. These are ongoing legal challenges from business groups, including sole proprietors and small business owners. They argued that this violated privacy rights. The court agreed, ruling that the plaintiffs were likely to succeed in their arguments that certain provisions of the CTA might be unconstitutional.
Texas Top Cop Shop, Inc. v. Garland (Docket No. 4:24-CV-478)
The plaintiffs in this case, an individual, three small businesses, the Liberation Party of Mississippi, and the National Federation of Independent Business (NFIB), fought and argued in court that the CTA is unconstitutional. The court determined that a nationwide ban on the Corporate Transparency Act’s enforcement would be applicable. FinCEN has not yet made any public statements on this matter. The government may decide to appeal this preliminary injunction to the US Court of Appeals for the Fifth Circuit. However, there is no determination as of yet. Companies and or businesses that have not yet filed their BOI reports under CTA may possibly delay their submission. The deadline is originally on for January 1, 2025